National flood program borrowing $2 billion to pay Florida's hurricane claims

TALLAHASSEE — After Hurricane Helene and Hurricane Milton pounded Florida's Gulf Coast last year, the Federal Emergency Management Agency is borrowing $2 billion to pay National Flood Insurance Program claims.

FEMA, which manages the flood-insurance program, said the two hurricanes as of Feb. 6 had led to more than 78,000 claims, with estimated losses possibly topping $10 billion. FEMA is able to borrow money from the U.S. Treasury to pay claims.

"This borrowing action follows payouts in 2024 from several large-scale and back-to-back flooding events," FEMA said in a news release. "While the NFIP's (National Flood Insurance Program's) premiums are usually sufficient to pay claims in years without catastrophic floods, heavy rain events in 2024 — including hurricanes Helene and Milton — caused massive, widespread damage resulting in tens of thousands of flood insurance claims."

Helene caused flooding and other damage in communities along the Gulf Coast before making landfall on Sept. 26 in Taylor County as a Category 4 storm. It moved through parts of North Florida before causing heavy damage in other states, including North Carolina and Georgia.

FEMA did not provide a breakdown by state, but it said Helene had led to more than 57,400 flood-insurance claims as of last week, totaling about $4.5 billion. The agency said the National Flood Insurance Program ultimately could face an estimated $6.4 billion to $7.4 billion in losses.

Milton made landfall Oct. 9 in Sarasota County as a Category 3 storm before crossing Florida. FEMA said Milton had led to more than 21,100 claims, totaling about $740 million, as of last week. It said estimated losses range from $1.2 billion to $2.9 billion.

"The NFIP is not designed to pay for multiple catastrophic events in a single year without additional financial assistance," the agency news release said. "The combined losses from 2024 have depleted the NFIP's funds generated from premiums to pay claims."

Property insurance policies typically do not cover flood damage, forcing residents to buy separate coverage. Homeowners in certain parts of Florida are required to carry flood coverage if they have mortgages.

While some private companies offer flood insurance, the national program dominates the market, with nearly 1.8 million policies in Florida as of last month, according to agency statistics. Overall, the program has about 4.7 million policies.

FEMA has $30.425 billion in borrowing authority to pay claims and had borrowed $20.525 billion after Hurricane Katrina in 2005, Hurricane Sandy in 2012 and Hurricane Harvey in 2017, the agency news release said.

"The widespread, devastating flooding following hurricanes Helene and Milton reemphasizes the financial effects flooding can have not just to survivors but also the National Flood Insurance Program," Elizabeth Asche, senior executive of the program, said in a prepared statement. "We are strategically utilizing short-term borrowings in 60-day increments, demonstrating our careful and responsible management of the borrowing authority."

In other real estate news:

¦ A Florida Senate Republican recently filed a proposal that would lead to studying the possibility of eliminating property taxes in Florida. Sen. Jonathan Martin, R-Fort Myers, filed the bill (SB 852) for consideration during the legislative session that will start March 4. Property taxes have traditionally played a major role in funding Florida schools and local governments. Martin's bill would direct the Legislature's Office of Economic and Demographic Research to "conduct a study to establish a framework to eliminate property taxes … and to replace property tax revenues through budget reductions, sales-based consumption taxes and locally determined consumption taxes authorized by the Legislature." Among other things, the analysis would have to look at the effect of eliminating property taxes on "public services, including education, infrastructure and emergency services" and evaluate whether a shift to "consumption-based taxes would make Florida more attractive to businesses compared to other states."

¦ The number of Citizens Property Insurance Corp. policies inched up last week and topped 945,000, according to information on the state insurer's website. Citizens had 945,005 policies as of mid-February, up from 942,810 policies a week earlier and 941,158 policies two weeks earlier. Citizens, which was created as an insurer of last resort, grew to 1.4 million policies in 2023 amid financial problems in the private market. But its policy count has decreased because of what is known as a "depopulation" program aimed at shifting policies to private insurers and improvements in the overall market. With additional rounds of depopulation planned, Citizens expects decreases in its policy count in the coming months. Citizens leaders and other state officials have long sought to reduce the number of Citizens policies, at least in part because of financial risks if the state gets hit by a major hurricane or multiple hurricanes. ¦